Australian dollar too high, likely to fall: RBA boss

The Australian dollar has weakened following comments by the Reserve Bank of Australia’s governor Glenn Stevens that it was overvalued and likely to fall with commodity prices.

Stevens was addressing a business lunch and offered that the current price of the dollar wasn’t supported by economic fundamentals, Fairfax reports.

"The terms of trade are likely to fall, not rise, from here," said Stevens.

"So it seems quite likely that at some point in the future the Australian dollar will be materially lower than it is today.''

The dollar responded by dropping from US95.75c earlier in the day to US95.09c late yesterday.

This morning the Australian went under 95 cents for the first time in three weeks..

"There is support for the Aussie around the 95 to 95.25 US cent level and it will need to trade higher than this level before we see any strong buyback into the market," Vito Henjoto from Invast told AAP.

"Medium term downside risk for the Australian dollar/US dollar has increased with the RBA unlikely to cut rates further."

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